The Acquisition Term Sheet is a crucial preliminary document in Indonesian M&A transactions that sets the foundation for detailed negotiations and definitive agreements. It is typically used in the early stages of an acquisition process when parties have agreed on basic terms but before conducting detailed due diligence and drafting final documentation. The document must account for Indonesia's complex regulatory environment, including the Investment Law (Law No. 25 of 2007), Company Law (Law No. 40 of 2007), and various sector-specific regulations. It's particularly important in cross-border transactions where foreign investment restrictions and ownership limitations apply. While primarily non-binding, certain provisions such as confidentiality and exclusivity are typically binding, making it a significant step in the M&A process under Indonesian law.
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1. Parties: Identification of the buyer, seller, and target company, including complete legal names and registration details
2. Background: Brief context of the proposed transaction and current ownership structure
3. Definitions: Key terms used throughout the term sheet
4. Transaction Structure: Outline of the proposed acquisition structure (share purchase, asset purchase, etc.)
5. Purchase Price: Proposed consideration and payment terms, including any adjustments or earn-out mechanisms
6. Key Conditions Precedent: Essential conditions that must be satisfied before closing
7. Due Diligence: Scope and timeline for due diligence investigation
8. Exclusivity: Terms and duration of exclusive negotiations
9. Confidentiality: Confidentiality obligations of the parties
10. Timeline: Expected schedule for key transaction milestones
11. Binding Effect: Specification of which provisions are binding and non-binding
12. Governing Law: Confirmation of Indonesian law as governing law and jurisdiction
1. Management and Employment: Include when retention of key management or specific employment arrangements are crucial to the deal
2. Regulatory Approvals: Include when the transaction requires specific regulatory clearances (e.g., KPPU approval for large transactions)
3. Post-Closing Covenants: Include when specific post-closing obligations need to be highlighted early in negotiations
4. Break Fee: Include when parties want to specify termination fees for walking away from the transaction
5. Financing Conditions: Include when the acquisition is subject to buyer securing specific financing
6. Tax Structure: Include when specific tax considerations need to be addressed early in the process
7. Intellectual Property: Include when IP assets are a crucial part of the transaction value
8. Environmental Matters: Include for transactions involving industrial or natural resource businesses
1. Corporate Structure Chart: Current and proposed ownership structure diagrams
2. Key Assets Schedule: List of material assets included in the transaction
3. Price Calculation Methodology: Detailed explanation of purchase price calculations and adjustments
4. Key Regulatory Approvals: List of required governmental and regulatory approvals
5. Timeline Schedule: Detailed transaction timeline with key dates and milestones
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